Here's What Citi Thinks Of Alibaba's ADS Issuance

On February 4, Alibaba Group Holding Ltd BABA filed a Form F-6 to register 1B American depository shares to accommodate the issuance of additional ADS upon the deposit of ordinary shares by current holders who have indicated to the company.
Citi analyst Alicia Yap says that while the ADS registration does not indicate new equity issuance, it allows holders of ordinary shares to have the flexibility to sell their shares in ADS than as common shares in Hong Kong Exchange.
Related Content: Why Alibaba's Shares Are Sliding In Hong Kong Today While Tesla Chinese Rivals Strike Gains
The analyst believes a portion of the new registration could suggest future shares under the employee equity incentive plan. However, it might also mean potential selling intention by SoftBank Group Corp SFTBY SFTBF since it still owns 5.39 billion ordinary shares.
Yap reiterated a Buy rating on Alibaba with a $216 price target, suggesting an upside of 86%.
Price Action: BABA shares traded lower by 5.32% at $115.72 on the last check Monday.

Analyst Calendar